The Reluctant Franchisor By: Susan E. Wells, Esq., Jaburg & Wilk, P.C.

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Due to the heavily-regulated nature of franchising, clients often tell their attorneys "I'm only going to do a license. I don't want to do a franchise." Although a client may believe what he says, he's most likely drawing a conclusion that disregards the facts and/or the law.

What is a Franchise?

A "franchise" is defined differently under the federal franchise rule from how it is defined under state laws. The definition of a “franchise” also varies from state to state. Under the federal franchise rule, if all of the following elements are present, then the business relationship constitutes a franchise:

• The franchisee will obtain the right to operate a business (or to offer, sell or distribute goods, services or commodities) that is identified or associated with the franchisor's trademark

• The franchisor will (or has the right to) exert significant control over the franchisee's business or provide significant assistance in the franchisee's business

• The franchisee makes (or promises to make) a required payment to the franchisor (or its affiliate)...

Please see full publication below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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